Strategy Mgnt 7

8/8/2019 Strategy Mgnt 7

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GROUP-7

PRESENTED BY:

y DEBA PRASAD MISHRA

yDEBASHREE ROUT

y SANDEEP PARIDA

y SIMANCHAL DAS H

y SHARANYA G.S

y RISHI SINGH

y RAM KRISHNA


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PERFORMANCE MEASUREMENT


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PERFORMANCE MEASUREMENT

y Performance measurement is a crucial part of

evaluation and control . To achieve the

organizations goal, managers must identify

measures that are controlled or influenced byemployees action.

y A performance measurement system must

provide timely information for managementdecision to be a unifying component.


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Performance measurement is basedon certain principles

y All significant work activity must be measured and

unmeasured work should be minimized or

eliminated.

y Desired performance outcome must be established

for all measured work.

y A timed phased baseline must be developed to

evaluate total organization performance. Thisbaseline must incorporate all organizational activity.

y Operating and financial performance reporting must

be synchronized with the same reporting periods

and reporting frequency.


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y Performance reporting and variance analyses

must be accomplished frequently.

a. Frequency reporting enables timely corrective

action.

b. Timely corrective action is needed for effective

management control.


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Negative impact of performancemeasurement

y Goal displacement:- refers to the relationship

between means with ends.

They can be of 2 types, Behavior substitution: refers to a

phenomenon where activities that dont lead

to goal accomplishment are substituted for

activities that do lead to goal

accomplishment. quantifiable measures

drive out non-quantifiable measures.


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Sub-optimization: it is a situation where one

part of the organization optimizes its activities

to the detriment of the organization as a whole.

Eg: one divisions objective of achieving higher

profits can result in its refusal to share new

technology or process improvement with otherdivisions.


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TOOL FOR PROBLEM SOLVING


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TOOLS FOR PROBLEM SOLVING

y MANAGEMENT SCIENCE

y OPERATION RESEARCH

management science is a set of quantitative tools;

management science uses decision models;

quantitative models assist decision makers; they

cannot substitute for or replace a manager.


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TYPES OF MODELS AND SCIENCE TECHNIQUES

y The Program Evaluation and Review Technique (PERT). PERT isplanning and control technique that allows managers to

decompose a project into specific activities and to plan far in

advance when its is to be completed.y Breakeven Analysis. Breakeven analysis helps managers

determine how many units must be sold before a product is

profitable.

y Linear Programming. Linear programming are used todetermine the best way to allocate resources to achieve

some desired objectives.


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yGame Theory.

Game theory attempts topredict how rational people will behave in

competitive situation.

ySimulation Models. Simulation models aremathematical representations of the

relationships among variables in real-lifeorganizational situations


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Control Tools And Techniques

y Nonfinancial control techniques. Nonfinancial control

techniques include rewards and punishments,

selection procedures, socialization and training, the

management hierarchy.

y Financial Control Techniques. Financial controls help

managers to keep costs in line, maintain a viable relationshipbetween assets and liabilities, sustain adequate liquidity, and

achieve general operating efficiency.


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STRATEGIC EVALUATION AND

CONTROL


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WHAT IS STRATEGY EVALUATION AND CONTROL ;

Strategy evaluation is that phase of strategic management

process in which managers tries to assure that the

strategic choice is properly implemented and meeting the

objectives of the enterprise.

Strategic control is the process of determining what is

being accumulated so that corrective course of action can

be taken in order that performance is on the path ofprogress.


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Why strategy evaluation and control

This speaks of the importance of this function of strategic management. Wrong postulations in planning.

Ineffective strategies formulated and implemented are tobe evaluated.

To develop right reward systemIt is the strategy evaluation and control which brings tolight who are the performers, super-performers, and utterperformers , it designing a motivation at system thatworks.

Formulation of new strategies.It is the continuous monitoring that helps in completion ofthis cycle of strategy formulation and implementation.


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Modifying the present strategies.

These inputs can be well utilised in modifying the present

strategies,it is clear present and future strategies have their root in the

strategies of the past.

Integration of individual tasks.

It signifies its ability to coordinate the task performed by

individual managers, groups, division and so on through control

of performance.

Keeping check on validity of strategic choice.Evaluation provides a feed-back on the continued relevance of the

strategic choice made during the formulation phase.

Taking supportive decisions.

Help to assess whether these decisions match the intended


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TYPES OF STRATEGIC CONTROL

Premise control:Every strategies is founded on certain assumptions related to

environmental and organizational forces. Change in them is sure to

affect the strategy to a great extend. So premise control is highly

required to keep in track with the changes.

y Implementation control:

The purpose of implementation control is to evaluate as toweather these plans, programmed and projects are actually guiding

the organization to wards its pre-determined goal or not.


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Strategic surveillance:

Strategic surveillance is more generalized and overriding

control which is designed to monitor a broad range ofevents both inside and outside the organization which are

threaten the firms strategy.

y Special Alert control:

It is based on a trigger mechanism for a rapid

response and immediate reassessment of a givenstrategy in the light of a sudden and unexpected

events.


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PROCESS OF CONTROL AND EVALUATION

REVISE RESET REFINE

FEED-BACK

OBJECTIVES

STRATEGIES

PLANS

SETTING

PERFORMANCE

STANDARD

ACTUAL

PERFORMANCE VARIENCE

ANALYSIS

CORRECTIVE

ACTION


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STRATEGIC PLANNING AND

AUDIT


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strategic planning

y strategic planning identifies where theorganization wants to be at some point in the

future and how it is going to get there. The

"strategic" part of this planning process is thecontinual attention to current changes in the

organization and its external environment, and

how this effects the future of the organization.Skills in strategic


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planning are critical to the long-term success of your

organization.

This form of planning includes:a)Taking a wide look around at what's going on outside the

organization and how it might effect the organization (an

environmental scan)

b) Taking a hard look at what's going on inside the organization,including its strengths, weaknesses, opportunities and threats (a

SWOT analysis)

c) Establishing statements of mission, vision and values

d) Establishing goals to accomplish over the next (usually) threeyears or so, as a result of what's going on inside and outside the

organization


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Strategic Audit MeasurementMethodology

y The Evaluation Of Corporate Strategy

Each organization has its own approach to evaluation.

There are not absolute answers as to the proper evaluation

standards. However, there are three basic questions to ask instrategy evaluation:

y Is the existing strategy any good?

y Will the existing strategy be good in the future?

y Is there a need to change a strategy?


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Qualitative Organizational Measurement

yThere is no universally endorsed list of

critical questions designed to reflect

important facets of organizationaloperations. However, several that might

be useful to the practicing managers are

presented below.


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Quantitative measurements

yQuantitative measurements provide information and

insight as to how well an organization is

accomplishing its goods and objectives. Inattempting to evaluate the effectiveness of corporate

strategy quantitatively, we can see how the firm has

done compared wit its own history, or compared

with its competitors.


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Many quantitative measures may be developed to

determine performance results.

These standards expressed in quantitative terms include:

Sales (growth of sales)

Net profit

Dividend returns

Return on equity

Return on investment

Return on capital

Marker share

Earnings per share

The list is long and many other factors could be included.

The objective of all of these endeavors is financial control.


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THANK YOU

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Strategy Mgnt 7